The Coming Rebound with David Stevens

In the present
climate, there’s a lot of misinformation and uncertainty in the marketplace. I recently had the
pleasure of interviewing David Stevens, Chief Executive Officer at Mountain Lake Consulting, Inc., and former
CEO and President of the Mortgage Bankers Association (MBA), about the current economic
situation. Here are some of the top takeaways:

The COVID-19 crisis is unlike anything we have ever
experienced before. The
last global recession was caused by a credit collapse, but this is a very
different scenario. Before this sudden storm hit so quickly, the economy was
very strong, we were on track to have a booming housing market and the biggest
concern in the industry was a lack of inventory. Right now, we’re in the eye of
the storm, but this too will pass. It’s predicted there will be an 18
percent decline in GDP this quarter, but an 11 percent increase in the next. Once people can get
back to work, the downward trend will stop in its tracks and there will
be an immediate pop back. It won’t be back to where it was, but it will happen
quickly.

Real
Estate Will Recover Quickly

Real
estate is likely to be one of the first industries out of the crisis. When we
come out of this, there will still not be enough housing inventory to meet
demand, which means that any house price downturns will be very minor. Also, during
the last recession, household formation was declining but, this time around, the
country’s demographics mean it is growing. Because of limited supply, pent-up demand
and record low interest rates, when conditions ease it is expected that there
will be significant movement in the real estate marketplace.

Millennials
Will Be Central to a Rebound

Unlike
a decade ago, when they might have still been in college or living with their
parents, many Millennials are now ready to look for homes of their own. Today,
the percentage of 30-year-olds with mortgages is about 10 percent lower than in
previous decades. This is because many people in this age bracket have been renting
and delaying their buying decision. This may now change. During the pandemic, people
have had the opportunity to re-evaluate and many will decide that they want to
change their circumstances and buy a property. Once these people return to work,
the real estate market will experience a kickstart as a result.